Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence


Memorandum by Nick Lightbody BA (Hons), Solicitor FRSA (DHB 26)

ENVIRONMENTAL SEARCH SERVICES AND THE HOME INFORMATION PACK

SUMMARY

  The proposed introduction of a compulsory environmental search will generally be welcomed by solicitors and other practitioners but the proposed use of the Environment Agency's "Residential Property Search Report" as the new standard compulsory conveyancing search is seriously flawed. This is because the information provided by the Agency's Search does not meet with existing standards nor comply with established methodologies.

  Homebuyers, lenders and their advisors want the ability to quickly cheaply and easily obtain accurate reliable and appropriate or relevant information in an easily understandable form to enable them to decide that there is "no cause for concern" regarding contamination of the subject property or, alternatively, establish that there may be "cause for concern" and decide what steps to take.

  The Agency's Search does not provide comprehensive information meeting established and authoritative guidance and as such, if it were a compulsory search, and thus likely to be the only search of environmental matters undertaken, may prove misleading to homebuyers, lenders and their advisors.

OVERVIEW

  This submission deals with the questions relating environmental searches set out in paragraphs, 5.33, 5.41 and 5.56 of the consultation paper of the contents of the Home Information Pack.

  The government's objective of ensuring that homebuyers and lenders have access to relevant environmental information about property being bought is well founded. However, the current proposals as set out in the consultation document do not reflect current best practice or the guidance set out in the Law Society's Warning Card or the Society's Conveyancing Handbook.

  The author of this submission, Nick Lightbody, is a lawyer who has taken a strong interest in the issue of environmental reporting for property transactions for more than a decade and has been an active member of the Law Society's Planning and Environmental Law Committee. He assisted in the preparation of the Law Society's Warning Card on Contaminated Land and prepares the relevant text on this issue for the Law Society's Conveyancing Handbook—the standard text for conveyancers. He is a contributor to Butterworth's Encyclopaedia of Forms & Precedents regarding environmental liability and real property. Over the past year he has presented lectures to hundreds of solicitors all over England on good practice in conveyancing regarding environmental liability. He believes that appropriate and relevant clear practical and achievable advice on good practice regarding environmental liability in property transactions is essential and will be welcomed by solicitors and their clients alike.

1.  WHAT DO SOLICITORS AND THEIR CLIENTS REALLY WANT?

  1.1.  Client's seek certainty from solicitors and view legal fees as a means of guaranteeing, so far as possible, that they have all relevant information on the matter on which they are taking a decision. Thus if a problem arises in relation to a property they have purchased or leased, of which they were not appraised before proceeding, they will generally look to their solicitor for, at the least, an explanation.

  1.2  Solicitors seek to provide their clients with the certainty that they seek and, when taking an interest in real property, such certainty can generally be obtained in the normal course of a transaction regarding title and matters registered with the Local Authority. As to matters which were probably only known to the Seller there is less certainty. Questions regarding environmental matters, contaminated land, flood, radon, mining and electromagnetic radiation are generally less capable of receiving a certain response but are now much more likely to asked for by the Buyer and asked by the solicitor.

  1.3  The solicitor's task in buying real property is to maximise what the Buyer receives and minimise the actual and potential liabilities that may detract from their purchase and both its amenity and value.

  1.4  Solicitors want to undertake their conveyancing work effectively, to give their client a good professional service complying with legal and professional requirements, and efficiently, to ensure that they operate their practice profitably.

  1.5  Solicitors want their clients to return with further instructions in the future and to recommend them to other potential new clients.

2.  WHAT DOES THIS MEAN IN PRACTICE REGARDING ENVIRONMENTAL ISSUES?

  2.1  Traditionally solicitors have advised their clients regarding flood, mining, brine and radon, or have done so when they thought it relevant. This involved some guesswork as to relevance since there were generally either no comprehensive search services available or the cost/inconvenience was such that such searches were avoided unless there was a good reason to undertake them.

  2.2  The issue of contaminated land started to became relevant and known within the profession in the mid 1980's following experience in the USA and in Europe. However, most practitioners were probably not aware of this as an issue until after the Environment Protection Act 1990 drew their attention with its provision requiring Local Authorities to inspect their areas for Potentially Contaminated Land. How this was to be done was initially very uncertain, as was the likely effect on prices/values but there was an obvious concern about blight.

  2.3  The problem for practitioners was that there was initially no quick easy and cheap means available of obtaining information to enable them to advise their clients on whether or not contamination of land might be an issue. In consequence, whilst this was increasingly dealt with in commercial transactions in the residential sector it was generally ignored through lack of a suitable search service.

  2.4  In time, the private sector, from 1992, started to innovate and develop suitable search services which were, however, still far too expensive to be contemplated in the residential sector.


3.  HOW CAN YOU IDENTIFY LAND WHICH MAY BE CONTAMINATED?

  3.1  Work was undertaken with the support of the Department of the Environment in the 1980s, with object of establishing a methodology for identifying potentially contaminated land, which included the Cheshire Study undertaken in order, inter alia, at Executive Summary Para 1 to "evaluate the usefulness of alternative sources of data and establish[ing] a basic methodology" [to identify potentially contaminated sites]; at para 4 it states that "The basic data source should be a comprehensive set of historical maps, at a scale of 6" to 1 mile or 1:10,000" and later makes more specific reference to the relevant map series etc.

  3.2  In 1993 the Parliamentary Office of Science and Technology published its report on Contaminated Land noting that the "Caveat Emptor" rule seemed likely to continue (in accordance with the Law Commission's consideration at that time) and that their principal conclusion was the need for more information. They noted that the identification and investigation of contaminated sites should commence with the compilation of a site history citing old Ordnance Survey mapping as the prime source of reliable information. This is because Ordnance Survey mapping has been historically the only comprehensive data gathering process regarding the use of land at a certain time by reference to physical location in England and Wales since about 1840. Other sources are by their nature fragmentary, only recording occupiers or incidents of which the directory or register creator became aware.

  3.3  In 1994 the Department of the Environment published CLR Report No 3 (CLR3) regarding Documentary Research on Industrial Sites which concluded that Historic maps are an indispensable source of information for research into a site's history and then discusses the problems to be overcome when using such mapping for this purpose.

  3.4  The recent British Standard BS10175:2001 on investigation of potentially contaminated land specifies the importance of establishing the history of the site, cites Ordnance Survey maps as the prime source of information, cites CLR3 with approval and notes that historic mapping may not represent a complete record of historical land use. This should not detract from the fact that they are the best original source that we have available.

4.  THE LAW SOCIETY'S WARNING CARD

  4.1  As a result of increasing concerns within the profession, and after the new Contaminated Land regime came into force in England in April 2000, the Law Society issued a Warning Card in June 2001 advising solicitors that they must exercise their professional judgement to determine the applicability of the advice in the Card to each matter in which they are involved.

  4.2  The text of the card includes some contradictions in that it says that it does not constitute a professional requirement for solicitors yet also says that one must consider the Society's advice in every transaction. It has been largely interpreted as resulting in a solicitor, who decides that contamination is not an issue without undertaking an appropriate search, and without the client instructing them not to do so, thereby assuming potential liability for any contamination issues that subsequently arise.

  4.3  The private sector had continued to innovate since 1992 and the first Environmental Data Search at under £40 appeared in 1999. By October 2000 such a search could be purchased for £25 and obtained within minutes over the internet.

  4.4  The availability of quick, accurate, reliable and relevant searches and the publication of the Society's Warning Card resulted in a massive increase in the use of these search services by practitioners so that now more than half of all purchases of registered land are thought to have the benefit of such a search.

5.  WHAT IS NOW "GOOD PRACTICE"?

  5.1  The majority of purchasers of registered land now appear to have the benefit of an Environmental Data Search from a commercial provider.

  5.2  In consequence, it is probably now good practice to undertake such a search in every case. The object is for the practitioner to be able to report to their client that there is "No Cause for Concern" regarding potential environmental liability and thus deal with the purchase secure in that knowledge.

  5.3  The problem facing practitioners until recently was what to do with the Search Report when it was received? Interpretation of a 30 page report was not what most solicitors wanted to do nor felt competent to undertake. The time spent was unwelcome and reduced profitability. However, the competition in the private sector, which had earlier driven down prices to £25 from about £300, again benefited solicitors and their clients as reports started appearing in October 2001 with authoritative Certificates on Page 1 resulting in the practitioner not having to do more than check that the Certificate had been given in each case.

  5.4  These Certificates, if from an appropriate organisation, enable solicitors to give their clients a degree of certainty on this issue and have been welcomed throughout the profession and the lending industry.

  5.5  Where a Certificate is not initially issued further enquiries by the solicitor under the advice of the Certifier may result in a Certificate being issued in due course.

  5.6  Current Good Practice is commented on in the current editions of the Law Society's Conveyancing Handbook and the Society's Environmental Law Handbook.

6.  IN THE LIGHT OF THE ABOVE DEVELOPMENT OF GOOD PRACTICE WITHIN THE CONVEYANCING PROFESSIONS WHAT WOULD BE THE EFFECT OF A NEW REQUIREMENT FOR A COMPULSORY ENVIRONMENTAL SEARCH?

  6.1  An accurate reliable and appropriate compulsory Environmental Liability Search is to be welcomed, and would be welcomed generally by practitioners, since it would end the current difficult facing competent practitioners in the residential sector who are undercut on price by those less competent practitioners who choose not to undertake such a search.

  6.2  An accurate reliable and appropriate search should be compulsory since without an existing detailed knowledge of the property going back to 1840 or so it is generally impossible to ascertain whether or not potential contamination is an issue without undertaking such a search. The search being compulsory would avoid the difficult issues facing some practitioners in the more price sensitive parts of the domestic market.

7.  IS THE SEARCH PROPOSED BY THE ENVIRONMENT AGENCY AND INCLUDED WITHIN THE RECENT CONSULTATION DOCUMENT ON THE HOME INFORMATION PACK ACCURATE RELIABLE AND APPROPRIATE?

  7.1  Unfortunately the answer is a firm NO for the following reasons:

    (a)  The means by which one assesses whether or not land is potentially contaminated in both a practical and a legal sense is by assessing the existence or otherwise of a "Pollutant Linkage".

    (b)  There must be a Source potential contamination based on the historic use of the land a Pathwaypermeable geology or appropriate hydro-geology—and a Target—something or someone which can be adversely affected by the pollution being communicated to it by the pathway.

    (c)  The search proposed by the Environment Agency does not include any comprehensive information regarding historic land use, merely information that the Agency happens to hold on its registers. Notably there is no information derived from historic Ordnance Survey Mapping. Thus there is no attempt to identify a Source based on reliable and accepted methodologies. Whilst the Agency search would reveal that it held a record of relevant information showing that there was cause for concern, the nature of the Agency's records are not sufficiently comprehensive nor reliable for showing, as a result of them not having a record, that there is "No Cause for Concern". This is where the commercial search services based on Historic Mapping succeed and the Agency's search fails. Solicitors and their clients want a reliable answer, so far as such is possible, to the question "Is there Cause for Concern?" There is no such reliable answer possible without the comprehensive information derived from historic mapping.

    (d)  The search does not include information regarding the geology and hydro-geology of the land merely whether or not it is in a Groundwater Vulnerability Area. Thus there is no attempt to identify a Pathway.

    (e)  The search does note water abstraction points but does not otherwise seek to identify potential Targets.

    (f)  The search offers no interpretation thus leaving the practitioner to work out for themselves whether or not the search raises cause for concern.

    (g)  The proposed search fails to provide anywhere near the quality of the various recognised commercial products, from Groundsure Limited, Landmark Information Group Limited and Sitescope Limited and does not thus serve as a replacement for any of them. To offer the proposed EA Search as a means of establishing whether or not there was cause for concern regarding environmental matters could, or perhaps would, in my view, seriously mislead members of the profession and the public alike.

    (h)  The proposed search appears to replicate the information currently available free from the Agency's web site and would thus provide a useful free addition to the existing commercial services.

  7.2  It is recommended that a comparison of the proposed EA search with the current commercial search services is undertaken by an independent expert in order that the relative merits of the various Search Services may be assessed on an objective basis.


 
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